Economic and social research foundation

3.3 Case of Agriculture

3.3.1 Aid Relationships in the Sector

The agricultural sector has exhibited challenges in aid relationships over the past several years. Difficult and unhealthy GoT-DP aid relationships were partly complicated by the high number of donors (15-20) who are active in supporting agriculture complicated further by the fact that formulation of the strategy for development of the sector has been in progress for several years until recently. Mechanisms that have been put in place and the development of ASDS and ASDS have helped to improve coordination though there is a long way to go in this direction.

Representatives interviewed from both sides (government and development partners) remarked that they had witnessed some progress in aid relationships in the sector. However, they also made it clear that there is still a long way to go to meet the challenges in improving donor-government relations in the sector.
The tense relations were eased when a small representative group of DPs was set up and met with the Ministers of Finance and Agriculture and revisited the ASPD. The Heads of Agencies addressed various project related problems especially those by the multilaterals. This experience underscores the importance of involving high level dialogue as a way of unlocking impasse in aid relationships and paving the way for improved partnerships.

3.3.2 Progress in Budget Process

In recent years, it has been observed that accountability and transparency has continued to improve through the PER/MTEF process, in which development partners, civil society organizations, and the private sector have enhanced their participation in the budget process. On the other hand, the sector involves four lead ministries (agriculture sector lead minisies or ASLM¹⁷), each with its own MTEF. This has made it difficult to achieve harmonisation within MTEF. Progress in setting up a basket funding arrangement for the whole sector has also been slow. Less progress has been observed in terms of harmonising MTEF at national level with the MTEF at the district level.

3.3.3 Progress in coordination and harmonisation

Project-based assistance in the sector has all along been particularly common with Multilateral Development Partners (i.e. WB, ADB and IFAD), which contribute substantially in terms of levels of financing.

There are already a number of agricultural sector projects at various levels of implementation. Currently at the district level, focus is on District Agricultural Development Plans or DADPs Donor support to districts is largely through funding area-based programmes, such as the Participatory Agricultural Development and Empowerment Project (PADEP), the District Agricultural Sector Investment Project (DASIP), or the Agricultural Services Support Programme (ASSP) The DADPs offer exciting opportunities for donor support. However, the challenge is in mainstreaming the operations of existing large projects and programmes in the sector. The proposed basket funding arrangement would be a step forward in terms of harmonization
A recent independent evaluation of IFAD, for instance, has indicated that traditional IFAD identification and formulation methodology is seen by key partners to be anachronistic, non-transparent and outside the ASDP co-ordination process (ITAD, 2004)¹⁸. The report proceeds to point out that there have been donor-partner complaints over aspects of the preparation of the experience with the some IFAD projects. In the field visits that the team made, this message was echoed more among other development partners than from the line ministries. This is an indication that the authority for identification and formulation has yet to be driven from within the ASLM coordination framework.
The agricultural sector as opposed to most of the social sectors is largely within the private domain. In addition institutional complexities (i.e. 4 ASLM) create challenges in terms of harmonizing funding modalities, coordination of the sector, expenditure tracking and supervision of agricultural activities at the local level. Apparently, at the district level, there is limited understanding of the concepts and practices of SWAp. Agricultural sector programmes have yet to be fully adjusted to the decentralisation process. In addition, less formal mechanisms such as Client satisfaction surveys and modalities of engaging the private sector – service providers – at local level have yet to be consolidated.
Some progress has been achieved against non-programmatic elements such as a clear sector strategy, the ASDS, and structures set up for aid coordination, the Food and Agriculture Sector Working Group (FASWOG). The poor aid relations in agriculture meant that donors largely withheld resources until there was a strategy and an implementation framework. The ASDS and ASDP are now in place. The FASWOG which has been established to address, among other things, the need for harmonization of processes at the sector level has not been effective in strategically addressing agricultural development issues. One factor that has contributed to rendering it less effective is the inadequate (at high level) representation and commitment from the sector Ministries. Other factors include the non-involvement of the MoF and the absence of an MOU to govern the relationships among stakeholders.
There are initiatives being taken towards sector-wide modalities that could avail a means of providing external support to the sector within a transparent, coherent, prioritised and monitored programme of action and budget. Although it has not been fully developed, it is encouraging to note that some of the development partners (bilateral donors) have accepted the idea of SWAp, and guidelines for its operation are already in place. However, the project aid modality is still the dominant mode in the sector. A substantial shift in the composition of aid to the sector in favour of sector-wide modalities of support is therefore a welcome development. A SWAp implies a change in approach towards taking a whole sector as the unit of focus for policy, for expenditure planning and for coordination between government, donors and stakeholders from Civil Society and the Private Sector.
The direct link between agricultural growth or sector output and the generation of income and revenue does have a number of implications which make agricultural programmes significantly more complicated to design than those found in social sectors (Ticehurst, 2005). First, market transactions have a far greater significance in agriculture than in social sectors where government is providing services which would not otherwise exist, or at least not on the same scale. This also implies that full cost recovery is more likely to be practised and subsidies are more difficult to justify than in social sectors. Second, being dominated by private sector operators it means that agricultural policy changes can have far reaching impacts. Getting policies and regulations right is probably more important for influencing farmers’ response than what direct resource allocation can achieve.

3.3.4 Recommendations

The following recommendations are made for the agriculture sector:

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  Initiatives need to be taken to strengthen existing avenues of dialogue within the sector to deal with matters relating to aid relationships. Priority should be given to capacity building within MAFS for continued progress in aid relationships, taking the lead in aid coordination in the sector and ensuring leadership and ownership of the policy dialogue.
  

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  Existing institutional arrangements (e.g. FASWOG) should be made more effective by enhancing capacity, commitment and engaging high level officials in the MAFS and MOF.
  

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  The orientation of the sector should shift from delivery of projects as such towards getting policies and regulatory framework right, on the basis of which positive response from actors mainly in the private sector can respond. It should be appreciated more that getting policies and regulatory framework right can induce responses which can lead to considerable outcomes even if the push for projects is reduced.
  

The GOT should harmonise MTEFs of all ASLM (as well as other agencies with agriculture related activities¹⁹) according to the sector policy. The process should involve aligning the MDAs strategic plans to MKUKUTA, working out operational plans and budgets derived from those plans. The new basket funding will then be harmonized with the budget process through MTEF.